Rumours swirl around Zuckerberg in China

Mark Zuckerberg has been spotted walking around Shanghai, which naturally led to a spike in online speculation about Facebook entering the Chinese market.

He said he was just on vacation with his girlfriend, Priscilla Chan. They live together in a rented house in California.

Mr Zuckerberg mentioned Ms Chan, a Chinese-American woman he met at Harvard, in a “60 Minutes" piece, saying they have been together “since before I started Facebook" – contrary to the filmic account of Mr Zuckerberg’s romantic clumsiness in The Social Network.

Mr. Zuckerberg’s previous trip to China – also with Ms. Chan – was in December 2010. That was billed as a vacation, too, although he also made public visits to the leading internet companies Sina, Alibaba and Baidu.

Baidu had no comment on Wednesday about Mr Zuckerberg’s current China trip.

Facebook remains blocked in mainland China, which has 460 million internet users, according to government figures. The site was firewalled in 2009 as the Chinese authorities said rioters used Facebook, Twitter and mobile phones to organise anti-government demonstrations in Xinjiang, in western China. Google, YouTube and Twitter also are blocked.

About 450,000 people in China access Facebook and other banned sites using proxies, tunnels or VPN software. Even so, China ranks a measly 101st on the Facebook global list, well behind the likes of Congo (90), Albania (78) and Bangladesh (55), according to figures on socialbalkers.

In reviewing Facebook’s recent filing for a public offering of stock, my colleague Brian Chen reported that the company had a penetration rate of less than 15 per cent in Japan and South Korea. In China, the filing documents said, Facebook has a near zero per cent penetration.

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“We continue to evaluate entering China," Facebook said. “However, this market has substantial legal and regulatory complexities that have prevented our entry into China to date."

Another complexity: The social networking universe in China already has well-established players like Renren, Tencent and Weibo, Sina’s hugely popular microblogging service.

“Google, considered the most successful foreign internet company to make a foray into China, managed to secure only 30 per cent of the Chinese search market before pulling out in early 2010, after a serious hacking episode and a reluctance to censor further in China," according to a recent Reuters overview of Facebook’s prospects in China.

In an interview with Charlie Rose in November, Mr. Zuckerberg said cracking the China market was “not the top thing we’re worried about right now’’.

Facebook’s chief operating officer, Sheryl Sandberg, sitting next to Mr Zuckerberg during the interview, said that “China’s obviously the big one’’, referring to countries where Facebook might expand. But she said a China venture was “not on the immediate horizon".

In a Businessweek cover story on Ms Sandberg and her role at Facebook, Brad Stone wrote:

Facebook has explored creating a joint venture with Chinese internet companies such as search engine Baidu to operate a division of the social network in China that complies with local censorship and filtering requirements. The company maintains that no decision has been made.

Sandberg says the subject, like countless interpersonal relationships on Facebook, is complicated. “There are compromises on not being in China, and there are compromises on being in China. It’s not clear to me which one is bigger," she says.

Three people familiar with these internal deliberations say that Sandberg and Zuckerberg fundamentally disagree on the issue. Zuckerberg believes that Facebook can be an agent of change in China, as it has been in countries such as Egypt and Tunisia. Sandberg, a veteran of Google’s expensive misadventures in the world’s most populous country, is wary about the compromises Facebook would have to make to do business there.